Australia: Shares end lower on fears of severe economic damage

[SYDNEY] Australian shares closed at a near two-week low on Tuesday as fears of a severe economic damage deepened following its central bank's comments, while a historic drop in crude prices overnight dragged energy stocks lower.

The S&P/ASX 200 index ended 2.5 per cent, or 131.70 points, lower at 5,221.30, its lowest close since April 8.

Reserve Bank of Australia Governor Philip Lowe said the country would suffer its biggest economic contraction since the 1930s in the first half of this year due to the containment measures enforced to curb the coronavirus' spread.

Although Australia has eased some of these restrictions as the virus' spread showed signs of slowing, unemployment remains a concern with data suggesting three quarters of a million jobs may have been lost between mid-March and early April.

"The broad-based nature of the fall in payrolls and wages bodes poorly for household consumption and the broader economy," Su-Lin Ong, analyst at RBC Capital Markets said in a note.

"The likelihood of elevated and sticky unemployment post Covid-19 suggests that any recovery in household consumption in 2021 will be modest notwithstanding some post (social distancing) relaxation bounce."

Dampening sentiment further, US crude slipped into a negative territory for the first time ever on Monday as a virus-induced slump in demand resulted in swelling inventories, with storage space becoming harder to find.

New Zealand's benchmark S&P/NZX 50 ended 2.1 per cent or 226.80 points lower at 10,535.87, with financials and healthcare stocks being the biggest losers.

The Reserve Bank of New Zealand said it plans to ease mortgage restrictions in response to the economic fallout from the coronavirus. 

REUTERS